Patronage Capital...Returning Money to You!
You own the Cooperative, which operates on a not-for-profit basis. Our sole purpose is to deliver safe, reliable, and renewable power to you at the lowest cost. All revenue exceeding the cost to provide electric service is allocated back to you in the form of Patronage Capital. Once allocated, your patronage capital is held by the Cooperative as a resource to rebuild aging infrastructure, increase capacity, maintain reliability, and to operate the Cooperative. This system helps keep your rates low and your service reliable.
The amount of patronage capital you are allocated each year is based on how much electricity you used during the year. In time, you will receive all of your allocated patronage capital back. The Cooperative’s Board of Directors retires patronage capital when finances allow, often on an annual basis. The oldest patronage capital is retired first. Fall River currently retires patronage capital on a rotation of approximately 20 years.
View this graphic to see how patronage capital is allocated and then retired back to you.
What is patronage capital? The Cooperative operates on a not-for-profit basis with all margins going to you - our owners. Patronage capital is your investment in the Cooperative’s infrastructure, and it is retired (paid out) on a rotation of approximately 20 years.
Where did the idea of patronage capital come from? The system of patronage capital started with the Cooperative in 1938. Investor-owned utilities were only interested in serving electricity to those areas with a relatively high number of customers. The rural residents surrounding Ashton, Idaho started an electric cooperative to bring electricity to their homes and farms. The first members of our Cooperative contributed a significant amount of money to start the construction of a distribution system. In time, they were paid back for their investment. That tradition continues today.
If patronage capital is returned to members, why not give it back right away? Your patronage capital is invested in building new or maintaining existing infrastructure, including generation facilities, poles, wire, transformers, and substations. Your allocated patronage capital also helps the co-op get loans at a lower interest rate, saving all members a lot of money on large capital projects. When you ask for a loan from the bank to purchase a home or business, they require that you have equity. Fall River must also have equity and we do this by keeping allocated patronage capital on hand for approximately 20 years. The alternative to the patronage capital system is higher electric retail rates in order to keep a large enough reserve of funds for capital investments and improvements.
What happens to my patronage capital after it is allocated to me? Your allocated patronage capital becomes working capital, which helps the Co-op invest in its infrastructure to continue providing you with safe and reliable service. Find out more about what happens to your patronage capital – from allocation to retirement – by viewing this graphic.
Why is the retirement rotation period 20 years? A 20 year retirement rotation helps the Cooperative achieve its ideal equity level, saving you and other members a lot of money in the long term. Shortening the retirement period would require increasing retail rates to achieve the equity needed by the Cooperative. The retirement rotation for patronage capital is set by board policy.
What happens to my patronage capital if I am no longer a Fall River member? Your patronage capital remains in your name until it is retired and paid out. To see if you have an undeliverable patronage capital check, view this 2013 list. If you have not kept us informed of any change of address since leaving our service area, you may want to check Patronage Captial 2013 List which contains the names of former members who we have been unable to deliver annual patronage capital notices.
Eventually, if we cannot deliver your retired patronage capital, we will use it to fund higher education scholarships for members and their children.
You can also choose to donate your future patronage capital refunds to the scholarship fund or to Fall River Helping Hands program which provides assistance to financially struggling members.
What if I pass away before my patronage capital is paid out? Your patronage capital would transfer to your estate. If the patronage capital was allocated to a joint account, and one spouse dies, we continue to pay out patronage capital to the surviving member. If both members pass away, we retire the patronage capital and pay it to the second estate. You can download an application to redeem patronage capital for a member who is deceased.
How will I know how much patronage capital has been allocated to me? We will send you a notice of your patronage capital allocations each year. You can also contact our office to find out more.
How are patronage capital checks calculated? The amount you receive depends upon the amount of electricity you purchased from the Cooperative and the year in which it was purchased. We do not mail checks of less than $5, but roll this amount over to the next year’s pay-out of retired patronage capital.
Will I receive a patronage capital check each year? Not necessarily. Fall River’s Board of Directors analyzes the financial health of the Cooperative annually and retires patronage capital when it is in the best interest of the membership. Patronage capital is retired on a “first in, first out” basis, and on a rotation of approximately 20 years.
How and when will I receive my patronage capital check? If a patronage capital retirement is approved, you will receive a check at the end of the year.
Can I get my patronage capital retired early? The Cooperative sometimes retires patronage capital early when a member is 75 years of age or older, or upon the death of a member. Please note that patronage capital is paid out at a discounted rate when it is retired early.The Board of Directors also sets a yearly limit for the early retirement of patronage capital. If every member asked for and received all their member equity today, the Cooperative would be unable to function.